Immediate Cash Infusions are the Only Way to Save New York’s Small Businesses
Statement by Jessica Walker, President and CEO of the Manhattan Chamber of Commerce
The coronavirus crisis is causing severe economic pain in all corners of the city, particularly in the small business community. The forced closing of bars and restaurants has been difficult to bear and is already triggering layoffs. And calls for New Yorkers to stay home, while absolutely right and justified, has been a real wallop to the economic stability of small businesses across-the-board.
According to the JPMorgan Chase Institute, 61% of small businesses in New York City (those with 500 or fewer employees) lack a 21-day cash buffer to keep operations going. Our Chamber is seeing the horror of this reality start to play out. Our Help Desk, which provides complimentary support to any business in need, has been inundated with urgent requests from business owners who need financial aid now.
Through the Small Business Services Department, the City is offering a critical stopgap measure that will soon provide small grants and loans to the neediest businesses. But these tools can only do so much.
The federal Small Business Administration’s emergency loan program is also limited. After 9/11 and Superstorm Sandy we saw that their application process is too cumbersome and moves too slowly to provide the emergency lifeline that many businesses need right now.
No, the only solution is an immediate payout to help businesses make it through to the other side of this crisis.
To stimulate the national economy, the White House has proposed making $1,000 payments to every American within the next two weeks. That proposal is worthy of serious consideration. But we should also consider making larger grants to small businesses in the hardest-hit sectors and areas like New York City. Maybe look to Australia’s economic response plan, which is currently putting up to $25,000 into the hands of small business owners.
Another possibility is for Congress to grant the U.S. Treasury Department the authority to guarantee bank loans made to small and medium-sized businesses. Depending on the specific eligibility criteria these loans could promote worker retention and ensure that money flows quickly to businesses most in need.
The key here is to provide a fast (and meaningful) infusion of cash to allow businesses to keep the lights on until life gets back to normal. This approach will bolster the small business community in New York City, which in turn will help the entire country get through this economic crisis on solid footing.